Bearishness Continues Among Oil Industry Experts
The business world is full of sometimes conflicting theories about what caused the plunge in oil prices during the past seven months, and how low that price will go. But Goldman Sachs seems to have come up with a unified theory.
It began late in the afternoon of Jan. 26 when Gary Cohn, the president of Goldman Sachs Group Inc., told the CNBC television program “Closing Bell” that he expected the average price of oil, now around the $45 range per barrel, to fall further, perhaps as low as $30 per barrel.
“My view is we’re probably in the lower, longer view,” said Cohn, a former oil trader. “We could definitely get down to $30.”
On the same day, Jeff Currie, Goldman’s chief commodity analyst, issued a research paper saying the demand for oil is slowing down in emerging economies, including China, meaning that the price of crude will stay low for a long time, and may never return to the prices they fetched 10 years ago.
Related: Increasing Demand For Refined Products Will Increase Oil Prices
In fact it was Currie who predicted that the price of oil would exceed $100 as it did a decade ago. Now, though, he points to a more recent element in the equation: the surge in shale oil production by the United States.
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